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Update on Oil: Sep 7, 2017

I started writing this post two weeks ago, after oil nailed our latest downside target (from Jul 31: 46.46) and was rallying nicely. Of course, a lot has happened since then.

I had been taken aback by the news that Andy Hall, such a prolific oil trader that he earned the moniker “God,” was shuttering his main hedge fund after sustaining a 30% loss trading oil so far this year.

I know nothing about Andy’s investment strategy or trading style [though he had a “colorful” reputation] But, this was a stark reminder of how fundamental analysis has utterly failed oil traders. We have only to look at the recent post-Harvey fluctuations to see the disconnect.

In the past three years, our periodic, directional calls on WTI have averaged over 500% annually. Our success has rested almost entirely on ignoring fundamentals and focusing on the things which have mattered: inflation, interest rates and stock prices.